1. Exchequer Partnership put forward two
options when submitting their bid in the summer of 1996.

2. The first, known as Scheme A, provided
for the demolition and rebuilding of the core of the west (St
James's Park) end of GOGGS to provide offices for the Treasury,
with the remainder of the building also used as offices.

3. The second, known as Scheme B (EP's preferred
option) provided for the demolition and rebuilding of the core
of the west (St James's Park) end of GOGGS to provide offices
for the Treasury, with new residential and hotel provision in
those parts not taken by the Treasury.

4. The proposal put forward in 1999 (developed
from proposals first put forward in the previous summer) differed
from these in three key aspects:

 it represented a refurbishment rather
than a more extensive redevelopment;

 it did not rely on a private sector
tenant occupying the east end of the building as hotel accommodation
or on the development of a suite of 24 apartments at the western
end overlooking St James' Park, with an underground car park;
and

 it did not involve any decant to
a third building in Vauxhall.

5. In other words, any assessment of the
costs of the proposals does not compare like with like. The 1996
schemes were for a redevelopment, not a refurbishment and the
bid price was subsidised by the value extracted from the development
of the hotel and flats (but it is not possible to calculate what
the value of the subsidies might have been).

6. Nonetheless, our best estimate of the
comparison of the capital cost was:

£m

May 1999 bid

90.218

1996 Scheme A

94.900

1996 Scheme B

96.457

at 31 March 1999 prices, updated by a Gardiner and Theobald Management
Services inflation estimate, as appropriate.

7. We also sought to compare service costs. This too
was difficult, since there are no widely accepted indices of inflation
in this area. However, even without allowing for inflation, the
1999 bid of £91.47 per square metre compared with one of
£98.51 per square metre in 1996.

8. Finally, we need to compare the savings we achieved
through not decanting to Camelford House in Vauxhall. This would
have cost £15.85 million to fit out for the Treasury, with
no prospect that any of the money could have been recouped after
our return to Whitehall. In contrast, the decant within the main
Treasury building and to our second building in Victoria to facilitate
the works will only cost around £300,000.